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The Government will introduce a new soft drinks industry levy to be paid by producers and importers of soft drinks which contain added sugar. The levy will be charged on volumes according to total sugar content with:

a main rate charge for drinks with more than five grams of sugar per 100 millilitres;

a higher rate for drinks with more than eight grams of sugar per 100 millilitres; and

an exclusion for small operators.

The Government will consult on the details over the summer, with legislation expected in Finance Bill 2017 for implementation from April 2018 onwards. No further information is currently available. Whilst this is being referred to as a sugar tax, it is not the same as the previously suggested tax at the final point of sale. Instead it is a levy on the producers and importers higher up the supply chain. As well as raising the levy itself, this may also increase VAT revenue to the extent that retailers choose to increase their retail prices in response.

This article was first featured in the KPMG Budget 2016 Commentary, view the full commentary PDF here.